Practice Management

For those who dare, social media rocks

Active users undeterred by regulatory hurdles say they are attracting clients

Apr 24, 2011 @ 12:01 am

By Lavonne Kuykendall

While many financial advisers remain skeptical of the business-building power of social media, those who are active online say the doubters are dead wrong.

“I get a lot of clients in their late 30s and 40s who are using the Internet exclusively to find service providers,” said Cathy Curtis, a fee-only investment adviser whose eponymous firm's website links to her blog, a Twitter account and a Facebook page she helps edit.

As for advisers who don't yet see the web's value, Ms. Curtis has a ready response: “I'm glad they don't do it; I want to be unique as long as I can.”

She and other advisers who have a prominent presence online will retain their advantage for a bit longer.

A recent survey by American Century Investments, which asked advisers how their view of social media had changed over the past year, found that they now have a more positive view of Facebook, LinkedIn, Twitter and other such sites than they did a year ago. Nevertheless, factors including regulatory and compliance issues, the potential for privacy breaches and home office restrictions made many advisers hesitant to go online. Regulatory experts said those concerns are real but surmountable, and if advisers aren't online it isn't because regulators won't let them (see On Social Media, a new InvestmentNews column, by clicking here).

Jennifer Sussman, director of online marketing and experience at American Century, said that advisers' increased involvement in social media over the last year is an indication that they “are realizing this is going to be important.”

Some of the reticence to go online “may be that they don't know how to do it, given compliance guidelines,” she said. “If we didn't have the constraints we have, it would be a whole different ballgame.”

Among the 303 financial planners, registered representatives and registered investment advisers American Century surveyed this year, the use of social-media sites for personal reasons trumps business reasons. The one exception is LinkedIn, a professional-networking site. Twenty-seven percent of advisers said they use it for business and 21% said their use is both for business and personal. Facebook is used by 17% of advisers for both reasons, while 1% use Twitter for business only and 6% said they use it professionally and personally.

Only 2% said they have business-related blogs, while 5% said they write blogs for a mix of business and personal reasons.

Asked to rank the overall value of social media to their business, only 12% ranked it 8 or higher on a 1-to-10 scale (with 10 the highest rating), while 38% ranked it a 3 or lower.

Asked an open-ended question about social media, about 45% expressed generally positive opinions with limited reservations, while 20% were negative and 9% said they have concerns regarding compliance or regulation issues. The remainder reported neutral or mixed feelings, or didn't use social media.

Securities Service Network Inc. a broker-dealer that works with 510 representatives, realized early on that the social-media trend “has legs,” said Wade Wilkinson, president and chief executive.

Regarding compliance, the firm uses a technology vendor that helps it comply with Finra regulations, which he said are clear. Still, he believes compliance burdens for broker-dealers are “fairly significant,” which could help explain why some are reluctant to encourage the use of social media.

This year, the Financial Industry Regulatory Authority Inc. is expected to release additional guidance that will explain its 2010 social-media guidelines in more detail.

Ms. Curtis — whose website offers her e-book, “10 Simple Truths About Money,” a blog called Of Independent Means, a link to her frequent tweets and a Facebook page — said she follows regulatory and compliance guidelines scrupulously.

“I stay with general personal financial subjects,” she said. “I won't even re-tweet articles if they mention that it's a good time to go into gold” or make other investment suggestions, she said.

Ms. Curtis said that her firm, Curtis Financial Planning, has undergone an audit — part of which involved looking at her website — but came through it fine.

“I don't find it that difficult” to stay on the right side of the rules, she said.

“Before, I had a stereotypical canned site, with general information” and little else, she said. “It did not do one thing to get me a client. No one ever said they liked my website.”

But once Ms. Curtis redesigned her site, she began getting compliments, and more than one client has told her that they found her through a Google search.

Early in his career, when fee-only adviser Scott Bell worked as a wirehouse representative, “my managers hated it when I put stuff in writing,” he said.

Today, the chief executive of Gross Domestic Product Inc., a registered investment advisory firm, writes a widely read and irreverent blog called IheartWallStreet, which offers pointed criticism of the financial services industry.

“The blog has served as an outlet for a kind of frustration with the industry,” Mr. Bell said. “It has been cathartic.”

Mr. Bell doesn't link his blog to his firm's website or use it as a marketing tool.

“It is not an obvious commercial for who I am,” he said. “To me, it is an outlet to connect with other people, and if business comes from it, great.”

Nevertheless, he has attracted at least one major client as a result of his online persona. The client first noticed Mr. Bell's tweets, then began reading his blog and eventually signed on.

The blog offered “a non- confrontational place to vet us,” he said. “From a client's standpoint, it is fantastic, a way to quietly watch the adviser.”

“Twitter has become my primary news feed,” Mr. Bell said. “If I see the same headline two or three times in my stream, I know that is the headline du jour.”

E-mail Lavonne Kuykendall at


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